Fiscal Justice

Fiscal Justice -- End the City & School Funding Crisis with Progressive Taxes & Revenue Sharing

City elected officials have every right and responsibility to speak up for Syracuse on state tax and budget policies because the city is dependent on state funding for a quarter of its budget and the school district for three quarters of its budget.

Without progressive tax and revenue-sharing reform, Syracuse faces insolvency. A Financial Control Board will replace our elected city government with state-imposed managers who will cut our schools and city services and tear up city union contracts.

The richest 1% in New York more than tripled their share of all state income from 10% in 1980 to 35% today. Meanwhile, state income taxes were shifted from the rich to working people: rates on the richest 1% were cut in half and doubled on the lowest income tax bracket. And increased state mandates combined with decreased state revenue sharing shifted the tax burden from the progressive state income tax to regressive local property and sales taxes.

The city's fiscal crisis has been manufactured in Albany and on Wall Street. If the rich paid the tax rates and the state shared the revenues like they did in the 1970s, Syracuse would have plenty of money to meet its needs.

Not enough money can be saved to avoid a Financial Control Board by the consolidations and cuts to public employee wages, benefits and labor rights that are proposed by the Governor, Mayor, and most major party politicians. But there is enough money for a well-funded city and schools in some combination of the following:

School Aid Formula:Fully implement the Foundation Aid Formula established by the Education Budget and Reform Act of 2007, which went part way toward establishing a relationship between state aid, the needs of students, and a district’s ability to raise revenue. The state is now $8.9 billion behind on this funding promised in 2007. The state aid formula needs to be further reformed in order to reduce gross inequities in per-pupil spending that remain across the state and provide resources to increase educational outcomes, particularly in high-need districts like Syracuse.

Revenue Sharing: Restore the traditional 8% (now below 2%) of state revenue shared with local governments in order to pay for state mandates and to compensate cities like Syracuse for hosting big governmental, educational, and medical institutions that are exempt from property taxes. A four-fold increase in the current $72 million Syracuse receives in Aid and Incentives to Municipalities would immediately end Syracuse's fiscal crisis and give it plenty of money to restore our schools, fire department, and youth and senior programs and put the unemployed to work building affordable housing, clean energy, mass transit, and the other things our city needs. With progressive tax reforms, the state can easily raise the revenues to increase the $774 million it spends on Aid and Incentives to Municipalities out of a $181 billion state budget.

Stock Transfer Tax: The state should keep the over $15 billion a year from this tax, which has been rebated 100% since 1981. Enacted in 1905, the tax is just 1.25 to 5 cents per share.

Progressive State Income Tax: The state should restore the more progressive tax structure of the 1970s, which would cut taxes for the bottom 90% and still take in $8 billion more dollars in revenue.

Bankers Bonus Tax: The Wall Street financial elite has been paying themselves over $20 billion a year in bonuses since the federal government began bailing out their banks in 2008 and which it continues to do through a variety of Federal Reserve programs, now at a cumulative total of trillions of dollars. A 50% Bankers Bonus Tax on bonuses over $50,000 would yield about $10 billion a year.

Single Payer Health Care: A single-payer health care plan for all New Yorkers would take public employee health care costs off the city and school district budgets. Public employee health insurance costs $100 million in the 2013-14, or 15% of the combined city and school district budget. A 2009 study commissioned by the state found that the efficiencies of a single-payer public health plan, providing comprehensive coverage that is free at the point of delivery to all, would save New Yorkers $28 billion a year in health costs by 2018 compared to a private insurance mandate plan, like that adopted federally in the Affordable Care Act of 2010. A single payer "New York Health" bill (A.5389-a/S.2078-a) had 74 co-sponsors in Assembly and 17 in the Senate at the end of May 2013. It is time to get it passed.

City Income Tax: A small progressive income tax on ourselves – including on the incomes of over 62,000 commuters to the city – would be fairer way to raise revenues locally than hiking property and sales taxes. Commuters have most of the middle and upper income jobs at big institutions that don't pay property taxes: four levels of government, several hospitals, Syracuse University, SUNY ESF, SUNY Upstate Medical University, and many for-profits with special tax breaks like Destiny USA. But they all use city services: police, fire, roads, water, sewers, trash disposal, parks, and more. It's time they pulled their own weight to fund our city. A progressive income tax with an average rate of 1% on Syracuse's $3.7 billion annual payroll would generate $37 million a year, enough to more than cover the city's structural deficits going forward.